The novel is narrated by 31 year-old Kathy H. as she reminisces about her childhood at the sheltered boarding school Hailsham, as well as her adult life after leaving the school. The story takes place in a dystopian Britain, in which human beings are cloned to provide donor organs for transplants. Kathy and her classmates have been created to be donors, though the adult Kathy is temporarily working as a "carer," someone who supports and comforts donors as they are made to give up their organs and, eventually, submit to death. As in Ishiguro’s other works, the truth of the matter is made clear only gradually, via veiled but suggestive language and situations.
The novel is divided in three parts, chronicling the three phases of the lives of its main characters.
The first part is set at Hailsham, a boarding school where the children are brought up and educated. The teachers there mysteriously encourage the students to produce various forms of art. The best works are chosen by a woman known only as Madame and are said to be collected in a gallery. It is seen that Hailsham is not a normal school by the odd way the teachers or "guardians" treat them, the emphasis on keeping healthy and the fences and boundaries that separate the school from its rural surroundings.
While the students of Hailsham are often cliquish and capricious, the three main characters — Ruth, Tommy, and Kathy — develop a close friendship during this time. Kathy herself seems to have resigned herself to being an observer of other people, and the choices they make, instead of making her own choices. She often takes the role of the peacemaker in the clique, especially between off-again-on-again couple Tommy and Ruth. Tommy is an isolated boy who struggles creatively and is often the target of bullies, while Ruth is an extrovert with strong opinions.
In the second part, the characters, now young adults, move to the "Cottages", residential complexes where they start to have contacts with the external world and they are relatively free to do what they want. A romantic relationship develops between Ruth and Tommy, while Kathy explores her sexuality but without forming any stable relationships. Upon hearing about a discovery made by one of the veterans of the Cottages, the characters travel to Norfolk where they are told by two veterans of the Cottages that Hailsham students could be allowed to "defer" the time at which they could start their donations by proving they had truly fallen in love. Tension between Tommy, Ruth, and Kathy rises as they all struggle to find acceptance and understanding outside Hailsham, inevitably leading to Kathy's departure from the cottages to become a carer.
The third part describes Tommy's and Ruth's becoming donors and Kathy's becoming a carer. Kathy cares for Ruth and then, after Ruth "completes" (Ishiguro's evocative euphemism for death), Kathy takes care of Tommy. Before her death, Ruth expresses regret over coming between Kathy and Tommy, and urges them to pursue a relationship with one another, and to seek to defer their donations based on their love. Encouraged by Ruth's last wishes, Kathy and Tommy visit Madame, where they also meet their old headmistress, Miss Emily. During this visit, they learn that Hailsham's emphasis on art was an attempt to prove to society that clones had souls. They also learn that deferring their donations under the foundations of true love was only a rumor that has continued to persist for many years and nothing more. The clones learn that Hailsham in general was an experiment, an effort to improve the conditions for clones and perhaps alter the attitudes of society, which prefers to view the clones merely as non-human sources of organs. The novel ends, after the death of Tommy, on a note of resignation as Kathy accepts her own inevitable fate as a donor and her eventual "completion."